TMI Blog2019 (4) TMI 1659X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial to prove that advertisement and sales promotion expenses have created long lasting benefits to the assessee, because advertisement and sales promotion are generally made in order to increase the sales and their impact is limited and felt for a short duration by the customers. Also see EMPIRE JUTE COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [ 1980 (5) TMI 1 - SUPREME COURT] So, in this case, assessee has undisputedly incurred advertisement and sales promotion expenses periodically, and not at once just to refresh the product and quality to be sold in the memory of its customers. So, it cannot be held to be in the nature of enduring benefit for a trader - advertisement and sales promotion expenses have been incurred by the assessee just to enhance its sales and profit and cannot be treated as capital in nature. - Decided in favour of assessee. Addition u/s 40A (ia) - scope of Notification No.56/2012 dated 31.12.2012 issued by the CBDT - disallowance of an amount debited by the assessee in P L account on account of bank guarantee commission - assessee has made certain payments to scheduled banks qua bank guarantee provided by the banks on which TDS was not deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia that :- ITA NO.5003/DEL/2014 (AY 2012-13 1. The order passed by the Learned Commissioner of Income Tax (Appeals)-6 ( Ld. CIT(A) ) under Section 250 of the Act is bad in law and on the facts and circumstances of the case. 2. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case by holding that the expenses incurred by appellant on advertisement and sales promotion were in the nature of capital expense and thereby disallowing the said expenses. 3. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case by not following the principle of consistency, despite there being no change in facts. ITA NO.5004/DEL/2014 (AY 2013-14 1. The order passed by the Learned Commissioner of Income Tax (Appeals)-6 ( Ld. CIT(A) ) under Section 250 of the Act is bad in law and on the facts and circumstances of the case. 2. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case by holding that the expenses incurred by appellant on advertisement and sales promotion were in the nature of capital expense and thereby disallowing the said expenses. 3. The Ld. CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter by way of appeals before the ld. CIT (A) who has confirmed the assessment orders by partly allowing the appeals. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeals qua AYs 2012-13 2013-14. 7. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUND NO.1 IN ITA NO.5003/DEL/2014 (AY 2012-13) ITA NO.5004/DEL/2014 (AY 2013-14) 8. Ground No.1 in ITA NO.5003/Del/2014 (AY 2012-13) and ITA No.5004/Del/2014 (AY 2013-14) need no findings being general in nature. GROUND NO.2 IN ITA NO.5003/DEL/2014 (AY 2012-13) ITA NO.5004/DEL/2014 (AY 2013-14) 9. Undisputedly, assessee has debited an amount of ₹ 12,33,64,847/- and ₹ 14,69,15,576/- in profit loss account on account of Advertisement Sales Promotion (AMP) expenses for AYs 2012-13 2013-14 respectively and treated the expenses as revenue in nature. It is not in dispute that assessee is an importer and distributor of wine and spirits in India and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case is :- as to whether advertisement and sales promotion expenses incurred by the assessee being an importer and distributor of wine and spirits in India in the forms of gifts, display at retail outlets, discount schemes, custom duty charged on POSM, etc. are revenue in nature as contended by the assessee? 14. Identical issue has been decided by the Hon ble High Court of Delhi in case of Monto Motors Ltd. (supra) by returning following findings :- 4. In view of the factual matrix which is available on record and as the Assessing Officer has not dealt with the factual matrix in detail we are not inclined to admit the present appeal. The advertisement expenses as per the findings of both the CIT (Appeals) and the Tribunal were not of capital nature. Advertisement expenses when incurred to increase sales of products are usually treated as a revenue expenditure, since the memory of purchasers or customers is short. Advertisement are issued from time to time and the expenditure is incurred periodically, so that the customers remain attracted and do not forget the product and its qualities. The advertisements published/displayed may not be of relevanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing into existence an asset or an advantage (or the enduring benefit of a trade, there is very good reason (in the absence of special circumstances leading to an opposite conclusion) (or treating such an expenditure as properly attributable not to revenue but to capital. This test, as the parenthetical clause shows, must yield where there are special circumstances leading to a contrary conclusion and, as pointed out by Lord Radcliffe in CIT v. Nchanga Consolidated Copper Mines Ltd. [1965158 ITR 241 (PC), it would be misleading to suppose that, in all cases, securing a benefit for the business would be prima facie capital expenditure so long as the benefit is not so transitory as to have no endurance at all . There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a. commercial sense and it is only where the advantage is in the capital field that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, widening and construction charges in order to facilitate easy movements of vehicles on the road which has been treated as expenses of capital nature on the ground that assessee has not filed any evidence; that road access construction charges will not give any enduring benefit to the assessee. Ld. AR for the assessee fairly conceded that he has not brought on record the complete facts in order to treat these expenses as revenue in nature. In view of the matter, this issue is remanded back to the AO to decide afresh after providing an opportunity of being heard to the assessee, hence ground no.3 of ITA No.5004/Del/2014 (AY 2013- 14) is determined in favour of the assessee for statistical purposes. GROUND NO.4 IN ITA No.5004/Del/2014 (AY 2013-14) 22. AO by invoking the provisions contained u/s 40A (ia) and Notification No.56/2012 dated 31.12.2012 issued by the CBDT disallowed an amount of ₹ 9,81,336/- debited by the assessee in P L account on account of bank guarantee commission. 23. Undisputedly, the assessee has made certain payments to scheduled banks qua bank guarantee provided by the banks on which TDS was not deducted. The ld. CIT (A) while relyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case goes to prove that this Notification is clarificatory in nature. Applicability of the aforesaid Notification to a period prior to the period of its issue has been examined by Hon ble Delhi High Court in case of Pr.CIT vs. Make My Trip India Pvt. Ltd. ITA 136/2019 by returning following findings :- 11. The above notification was referred to in the order of the CIT (A) but not discussed. The assessee is right in contending that by virtue of the above notification no TDS is deductible from payments made towards credit card or debit card commission for transaction between the merchant establishment and acquirer bank . This applies to the changes paid to the banks for providing payment gateway in the case on hand. 27. Furthermore, as per Second Proviso to section 40A (ia) of the Act, disallowance cannot be made because bank guarantee commission paid by the assessee to scheduled banks has been duly included in the total income of the banks as they are tax resident of India and they have duly paid the tax on such guarantee commission. So, under Second Proviso to section 40A (ia), no disallowance can be made. So, disallowance of ₹ 9,81,336/- made by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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